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Global Debt Patterns
An International Comparison of
Student Loan Burdens and
Repayment Conditions
Alex Usher
September 2005
Canadian Higher Education Report Series
The Educational Policy Institute
The Educational Policy Institute, Inc. (EPI) is a non-partisan, non-governmental organization
dedicated to policy-based research on educational opportunity for all students. With offices
in Virginia Beach, VA, Toronto, ON, and Melbourne, Australia, EPI is a collective association
of researchers and policy analysts from around the world dedicated to the mission of enhancing
our knowledge of critical barriers facing students and families throughout the educational
pipeline. In addition, EPI has developed extensive partnerships and collaborative
arrangements with other leading research and educational organizations, further supporting
our mission and ability to conduct policy-relevant research for practical use.
The mission of EPI is to expand educational opportunity for low-income and other historicallyunderrepresented students through high-level research and analysis. By providing educational
leaders and policymakers with the information required to make prudent programmatic
and policy decisions, we believe that the doors of opportunity can be further opened for all
students, resulting in an increase in the number of students prepared for, enrolled in, and
completing postsecondary education.
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About the Author
Alex Usher is the Vice-President of the Educational Policy Institute. Prior to joining the
Institute, he was the Director of Research and Program Development for the Canada
Millennium Scholarship Foundation, where he was in charge of Canada’s largest-ever
research project on access to post-secondary education. He is a native of Winnipeg, Manitoba,
and graduate of McGill University. ([email protected])
Citation:
Usher, A. (2005). Global Debt Patterns: An International Comparison of Student Loan Burdens
and Repayment Conditions. Toronto, ON: Educational Policy Institute.
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Table of Contents
Acknowledgements...................................................................................................................... ii
I.
Introduction.......................................................................................................................1
II.
Student Loan Interest Rates ............................................................................................3
III.
Debt Remission Programs ...............................................................................................6
IV.
Other Subsidies in Repayment .......................................................................................8
V.
Thresholds, Repayment Rates and Amortization Periods........................................10
VI.
Final Debt Burdens and Salaries After Graduation...................................................12
VII.
Calculating Debt Burdens .............................................................................................13
VII.
Calculating Debt Burdens .............................................................................................14
VIII.
Conclusions .....................................................................................................................19
Bibliography.................................................................................................................................22
Appendix (Country Profiles): ....................................................................................................23
Australia ..........................................................................................................................28
Canada .............................................................................................................................30
Germany ..........................................................................................................................32
The Netherlands .............................................................................................................34
New Zealand...................................................................................................................36
Sweden.............................................................................................................................37
United Kingdom (England & Wales)...........................................................................39
United States (ICR).........................................................................................................41
United States (non-ICR).................................................................................................43
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Acknowledgements
This paper is in part the result of research conducted on behalf of the Government of
Canada on the subject of international evidence on student debt management, a contract
that was won on a competitively-tendered bid in the winter of 2005 and completed in
March of that year. This paper is not the same as the one that was provided to HRSDC in
fulfilment of that contract, but contains some of the same material. That said, the
opinions and statements made in this paper are the author’s alone and do not in any
way represent the views of the Government of Canada.
Thanks are due to the many people in different countries who helped us assemble the
data in this paper, and in particular Melanie Corrigan of the American Council of
Education and Ian Dobson of EPI Australasia. Kim Steele and Massimo Savino were
essential in putting together the final product and, as always, the brilliant Amy
Cervenan’s valuable copy-editing and general sanity-enhancing qualities require
acknowledgment.
But the most important thanks are due to my co-investigator on the initial project, Dr.
Hans Vossensteyn of the Centre for Higher Education Policy Studies (CHEPS). In
addition to his diligent work on this specific project, his scholarship has helped the
author come to a more nuanced understanding of comparative higher education policy
His friendship is greatly valued.
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I.
Introduction
Much has been written in various countries over the past decade on the problem of
student debt. A good deal of it has focussed on spectacular (and sometimes incorrect)
figures with respect to the average debt of students who borrow. The implication is
usually that student debt is too high and that a variety of negative consequences will
follow from this, such as fewer low-income students attending PSE, greater penury
among graduates, and so forth.
However, declaring a particular amount of debt “too high” (as some are wont to do) is
impossible without taking into account the terms on which this debt is repayable. In
particular, the rate of interest and the amortization period of the loan are especially
important in this respect. As Junor and Usher (2004) show in a Canadian context, even
with steady levels of debt, changes in interest rates can change monthly repayment
burdens by as much as 20 percent in just 3 years. Similarly important is knowledge of
the borrowers’ future income – a debt of a given size might seem manageable to a
graduates of professional programs (e.g. Law and Medicine), but a debt of the same size
might be completely unmanageable for someone entering a less well-paid profession
(e.g. Early Childhood Education).
One commonly suggested “solution” to rising student costs and student debt is to make
loans “income-contingent.” But this, too, is overly simplistic. In the first place, most loan
systems have some degree of income contingency even if they do not call themselves
such. Canada, Germany, and the Netherlands, for instance, all have “soft” ICR systems
which allow low-income borrowers to suspend payments temporarily. Even among the
“hard” ICR systems (such as those in Australia, New Zealand and the UK) rules
regarding repayment periods, repayment rates, interest rates and – crucially – different
assumptions about the amount of debt that students will incur to fund their studies
(Usher 2005) vary significantly. As a result, the burdens placed upon the students that
borrow money from these systems varies considerably as well, thus rendering
impossible any generalizations (be they positive or negative) about the desirability of
income-contingency in a particular setting.
The purpose of this study is to move beyond debates about income-contingency or nonincome contingency as a means of loan repayment and focus on the specific nature of the
debt burden facing students in different countries. In particular, it will explore how
much students in different countries owe in student loan debt, the conditions governing
loan repayment, and the proportion of students’ post-graduation income needs to be
devoted to repayment. Exploring the nature of student debt-burdens in a comparative
context provides insights into the consequences of program choices that policy-makers
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in a single country may fail to observe. As shall later be demonstrated, some of the rules
regarding student loan repayment that governments – perhaps unthinkingly – have
adopted over the years have a greater impact on debt management than does the actual
amount of debt itself.
The eight countries included in this comparison are: Australia, Canada, Germany, The
Netherlands, New Zealand, Sweden, the United Kingdom (England and Wales), and the
United States. Together, these eight programs represent nearly all of the OECDs’ largest
and most long-standing public student loan programs. Details on each individual
country’s student loan debt management programs are included in this document as an
appendix; the main document will look solely at key data in comparative perspective,
including:
•
The rate of interest on student loans
•
Any loan remission programs available to students
•
Targeted subsidies available to students during the repayment period
•
Favourable tax treatment given to loan repayments
•
Income thresholds beneath which no loan repayment is required
•
Rates of required repayment above the income threshold
•
Average debt burdens
•
Average incomes of graduates
The report will conclude by examining the debt-to-income and debt-service ratios of
student loans among students in different financial circumstances in all eight countries.
The result is a fairly nuanced view of student loans in international context; no country
is consistently “better” or “worse” than the rest; each loan repayment system appears to
have specific strengths and weaknesses when compared to other countries.
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II.
Student Loan Interest Rates
In looking at student loan debt management programs, this section will start from the
point of loan origination; that is, from the point the loan enters the student’s hands. At
this stage, some countries begin their debt management efforts by subsidizing interest
costs while the student is in school. Table 1 shows the ways in which various countries
choose to subsidize loan interest, both during the period of studies and during the
repayment period.
Table 1 – Loan Interest Subsidies
Subsidies During Studies
Current
Interest
Rate
Subsidies During
Repayment
Current
Interest Rate
Australia
Full real interest subsidy:
Students pay the real value of
the loan (i.e. interest = inflation)
2.4%
Full real interest subsidy:
Students pay the real value
of the loan (i.e. interest =
inflation)
2.4%
Canada
Full nominal interest rate
subsidy: students pay no
interest
0%
No subsidies: students pay
“market” rate (prime + 2.5%)
6%
Germany
Full nominal interest subsidy:
Students pay no interest
0%
Full nominal interest
subsidy- Students pay no
interest
0%
Netherlands
Students pay government rate
of borrowing
3.05%
Students pay government
rate of borrowing
3.05%
New Zealand*
Full real interest subsidy:
Students pay the real value of
the loan (i.e. interest = inflation)
None
No subsidies: students pay
govt. cost of borrowing plus
CPI
7%
Sweden
Government subsidizes 30% of
the cost of borrowing
3.1%
Government subsidizes 30%
of the cost of borrowing
3.1%
United
Kingdom
Full real interest subsidy:
Students pay the real value of
the loan (i.e. interest = inflation)
3.37%
Full real interest subsidy:
Students pay the real value
of the loan (i.e. interest =
inflation)
3.37%
United States
Full nominal interest subsidy:
Students pay no interest
0%
No subsidies: students pay
govt. cost of borrowing
3.37%
* As of July 2005, the Government of New Zealand is considering eliminating all interest – real and nominal – on student loans both during studies
and during repayment, a move which would make New Zealand’s system identical to that of Germany. The proposal is a major plank in the ruling
Labour Party’s re-election platform for an election due to be held in late 2005.
The first column of Table 1 makes it clear that there are three basic approaches to dealing
with loan interest rates during the study period: “zero-nominal”, “zero-real”, and “cost
of government borrowing.” The zero-nominal interest approach is taken by Canada, the
United States, and Germany. In this approach, the loan does not grow in nominal terms
for the duration of the study period; in fact, in real terms, the loan shrinks while the
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student remains in school. This is the approach that has the largest government subsidy
attached. The zero-real interest approach is taken by Australia, New Zealand, and the
United Kingdom. Here, no real interest is charged, but loans are permitted to grow with
inflation so as to remain of constant value in real terms. This approach, too, has a
government subsidy attached, but less so than that of the zero-nominal approach.
Finally, there are those countries that charge students the government cost of borrowing
(the Netherlands) or a rate based on the cost of borrowing (Sweden). In these countries
there is no government subsidy at all, though students still benefit from government
intervention since they would be unable to receive such a rate on their own in the
private market. Interestingly, no country in our survey makes its students pay market
interest rates during the period of studies.
Column 3 of Table 1 illustrates the subsidy embodied in the loan during the repayment
periods. In five of the countries examined here, the loan subsidy remains the same for
the lifetime of the loan: from the time money gets in students’ hands to the time the loan
is repaid. These five countries – Australia, Germany, the Netherlands, Sweden, and the
United Kingdom – are also the five that provide loans to their students at below-market
rates. However, the fact that rates are below-market does not imply that the
governments actually have to pay money to subsidize interest. The Netherlands, for
instance, requires students to pay an interest rate equal to the government cost of
borrowing, which is an advantage to the students but does not require any outlay on the
part of the government (though it does carry an opportunity cost). Sweden charges its
borrowers the government rate of interest minus a 30 percent subsidy. Australia and the
UK have a more explicit subsidy in that they charge no real interest at all but apply only
a charge equal to annual inflation. Germany provides the largest subsidization of all, as
it charges no interest of any kind. There, the value of the loan stays constant in nominal
terms, meaning that the real interest rate is negative.
In the US, Canada, and New Zealand, however, the interest regime changes
considerably once a student leaves school. In these countries, during the in-school
period, the rate of interest is highly subsidized: in New Zealand, real interest is zero
while in Canada and the United States the effective zero nominal rate means that real
interest is negative. However, as soon as students leave school, rates jump significantly.
New Zealand charges its students the government cost of borrowing plus CPI (which,
since the government rate of borrowing has a built-in inflation factor, amounts to a form
of double charge). The United States charges its students the government cost of
borrowing plus 230 basis points (100 basis points equals 1 percentage point). Canada
charges its students the highest real interest rate of all: 250 basis points over the banks’
prime lending rate, which is itself over 175 basis points over the government’s cost of
borrowing (i.e. the Bank of Canada overnight rate).
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These systems could be seen as having “negative” subsidies to certain students, because
interest payments from borrowers are an actual source of revenue to government. In
effect, these three systems contain a degree of cross-subsidization, where “average”
borrowers who repay their loans steadily over a long period of time provide
governments with a stream of revenue which helps to pay for the loan losses incurred
by other students who do not or cannot repay their loans, or to cover other subsidies
embedded in the loan system (such as subsidized in-study interest in both Canada and
the United States). However, in no country does this cross-subsidization fully cover the
cost of loan losses; all three student loan programs still require substantial taxpayer
subsidies in order to remain solvent.
Of particular interest when viewed in international comparison is the seemingly
paradoxical treatment of student loan interest charges in Canada, New Zealand, and the
United States. When loans are in repayment, these three countries charge high levels of
interest; yet during the in-study period, both countries subsidize loans so heavily that
they carry no real interest. Figure 1 compares the treatment of loan interest during and
after studies.
percent +/- of government cost of borrowing
Figure 1 –Student Loan Interest Charges During and After Studies Relative to the
Government Cost of Borrowing
6
4
2
0
-2
-4
-6
During Studies
Aus
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Can
Ger
After Studies
Nld
NZ
Sw e
UK
US
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III.
Debt Remission Programs
Perhaps the simplest form of debt management is to reduce outstanding debt. This is
often known as “debt waivers” or “loan remission” or “loan forgiveness.” This is not
particularly common internationally, but it is an important feature of debt management
in a few countries, especially Canada and Germany. Table 2 shows debt reduction
payments made at the time of graduation.
Of the four countries where loan remission exists, only two – Germany and Canada –
use remission as a means to lower debt prior to the commencement of repayment. In
Canada, roughly one quarter of a billion dollars is spent annually by various provinces
and the Canada Millennium Scholarship Foundation to reduce debt at the end of the
period of studies. Generally speaking, remission is given to people based on the amount
borrowed over a year or a period of studies. Roughly one tenth of all debt incurred by
Canadian students is forgiven this way. Germany, on the other hand, has a threefold
program of debt remission, based variously on need (all debt over 10,000 euros is
automatically forgiven at graduation), merit (the top 30 percent academically of each
cohort receives debt remission of between 15 and 25 percent of debt) and completion
(students graduating early receive some debt remission).
In the other two countries where remission exists, the United States and the
Netherlands, remission occurs well after the start of repayment. In the United States,
most remission programs offer loan forgiveness in return for working in particular fields
deemed “sensitive” – such as health care, education, or engineering. There are over 150
such programs spread over 43 states in addition to some small programs at the federal
level. In the Netherlands, forgiveness occurs at the end of the 15-year repayment period.
In addition, the US has one other form of loan remission, which is the remission given to
ICR users at the end of 25 years of repayment. Similarly, the Netherlands also has
remission at the end of the repayment period (fifteen years).
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Table 2 - Loan Remission/Forgiveness
Targeting
Description
$ Benefit to Student
Canada*
Debt
Students with high debt on an
annual or per degree basis receive
remission
$2,775 per recipient
Germany
Merit
Students finishing in the top third of
their class in final examinations
have their debt forgiven
€1,342 per recipient
Completion
Netherlands
United States*
Debt
Completion
Usually,
workforce
contingent
Students who complete their studies
within a prescribed period of time
have part of their debt forgiven
Debt over €10 000 is forgiven
Students who complete their studies
within a prescribed period of time
have part of their debt forgiven
Students executing certain
workforce commitments or filling a
specific work need may have part of
their loan forgiven
€1,880 per recipient
Unknown
Unknown
Unknown
At 2004 PPP, $1Cdn = US$.78 = A$1.08 = €.75 = NZ$1.17 = SEK 7.46 = £.48
*Not universally available in all sub-jurisdictions; in both Canada and the US, remission is primarily a tool of sub-national governments and in neither
case does the national government use remission at graduation as a major policy tool (though the US government is starting to use remission as a
tool to encourage people to become teachers in certain subjects). As of 2002-3, seven Canadian provinces and 43 American states had remission
programs, each of which had different policy and program features. For details on Canadian remission programs, see Junor and Usher (2004), The
Price of Knowledge 2004; for details on American programs see the 33rd Annual NASSGAP Survey 1 and Kirshstein, Berger, Benatar and Rhodes
(2004), Workforce-contingent Financial Aid: How States Link Financial Aid to Employment. 2
33rd Annual NASSGAP Survey: available at http://www.nassgap.org/viewrepository.aspx?categoryID=3#
Workforce-contingent Financial Aid: How States Link Financial Aid to Employment: available at
http://www.luminafoundation.org/research/Workforce.pdf
1
2
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IV. Other Subsidies in Repayment
Within the repayment period, some countries specifically target some subsidies at lowincome students. These tend to come in two forms: those that exist for temporary lowincome status and those that are related to long-term debt forgiveness.
Countries with income-contingent systems (which tend to have subsidized interest
rates) tend not to have subsidies for short-term periods of low income. Instead, students
are simply permitted to abstain from payment until such time as their income recovers,
and the cost of this “payment holiday” is swallowed up in the more general interest
subsidies shown in Table 1.
On the other hand, countries using income-contingent deferrals (or “soft” ICR) do tend
to have specific subsidies for students whose income is temporarily too low to permit
repayment. In Canada, this is known as “interest relief,” in New Zealand as a “Base
Interest Write-Off” or “Base Interest Reduction” (the former is a full subsidy, the latter a
partial one), and in the United States, Germany, and the Netherlands as “deferment.” In
the Netherlands and Germany, these deferrals do not cost the government any extra
money; in the Netherlands because the interest is recapitalized into the loan and in
Germany because the cost is already subsumed by the general zero-interest cost
(technically, there is a cost because it extends the life of the loan, but this is difficult to
calculate). In the other three countries—New Zealand, the US, and Canada—the
subsidies all appear to be of roughly the same magnitude: roughly $500 per student per
year. Details on repayment subsidies for low-income students can be found below in
Table 3.
Table 3 –Repayment Subsidies Specifically Linked to Low-Income Status
Subsidies
Targeting of Subsidies
Value to Students
(annual)
Interest Relief /Debt
Relief in Repayment
Low-income/ Persistently high debt-toincome ratio over 3 to 5 years.
IR: C$546/recipient annually
Germany
Loan Write-offs
Presence of children
€1,256 per recipient
Netherlands
Loan Forgiveness
People with persistent low-income over 15
years
Unknown
New Zealand
Base Interest WriteOff/Base-Interest
Reduction
Low-income
Write-off: NZ$575/recipient
Deferment/Loan
write-off
Low income/Persistently high debt-toincome ratio over 25 years (ICR loans only)
Canada*
US (ICR)
DRR: C$6,068 per recipient
Reduction: NZ$520/recipient
Unknown
At 2004 PPP, $1Cdn = US$.78 = A$1.08 = €.75 = NZ$1.17 = SEK 7.46 = £.48
* Canadian dollars figures refer only to the costs accruing to the Government of Canada – to estimate the costs to provinces one should add another
66 percent.
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Two countries—Canada and the United States—also have a separate set of subsidies in
repayment which are tax-based in nature. In Canada, all student loan interest paid in a
calendar year is counted as a tax credit. Tax credits in Canada are calculated by
multiplying the tax credit “amount” (in this case, interest paid) by the lowest rate of
marginal tax (currently 16 percent) and outstanding taxes are then offset by the amount
of outstanding credits. In Canada, tax credits are preferred to tax deductions because
they are comparatively “flat” in their distributional effects; that is to say, they are worth
the same to all taxpayers, regardless of the tax bracket, whereas tax deductions are
worth more to taxpayers who are in higher income brackets. In contrast, in the United
States, the general tax regime posits that virtually all loan repayments are exempt from
tax (mortgage interest, for example, is tax deductible). Hence, the US’ very similar tax
provision to help graduates offset the cost of student loan interest is given as a
deduction rather than a credit. The US subsidy does, however, have a cap on the total
value ($2,500 US) so as not to provide too much tax benefit to high-income, high-debt
borrowers in repayment.
Table 4 – Tax-related Repayment Subsidies
Subsidies
Targeting of
Subsidies
Average Value
to Students
(annual)
Canada
Loan interest
Tax Credit
None
C$100 annually
United States
Loan interest
deductibility
(max $2,500)
None
Unknown
At 2004 PPP, $1Cdn = US$.78
.
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V.
Thresholds, Repayment Rates and Amortization
Periods
We come now to the specifics of loan repayment in various countries, which are shown
in Table 5 below. The table’s first column shows income thresholds for repayment.
Although the existence of income thresholds below which no repayment is required is
often popularly associated with “income-contingent” student loans, the fact is that
virtually all student loan systems have such thresholds. In systems that are not
“formally” income-contingent, these payment deferral mechanisms have been referred
to as “income-contingent deferrals” (Albrecht and Ziderman, 1991), and or as forms of
“soft” income-contingency (Usher, 2005). The primary difference is that in hard incomecontingent systems repayment the suspension of payments is automatic, while in other
systems borrowers in repayment must apply for the deferral and prove their low-income
status. This is a non-trivial transaction cost which prevents these programs from
achieving the universal coverage of low-income borrowers in repayment that formal ICR
systems achieve.
Table 5 – Loan Repayment Characteristics
Income
Threshold
Standard
Repayment
Rates
Amortization Period
Loan forgiveness
Australia
$A 35,000
4-8% of all income
n/a
At death/disability
Canada
$C24,000 †
Mortgage-style
9.5 years
At death/
Disability
(approx)
Germany
€11,520‡
Mortgage-style*
20 years
20 years
Netherlands‡
€13,870
Mortgage-style
15 years
15 years
New Zealand‡
$NZ 16,172
10% of marginal
income
n/a
At death/disability
Sweden
None
See Appendix
25 years
Age 68/death
United Kingdom
£15,000
9% of marginal
income
n/a
Age 65/death
US (ICR) ‡
$US 10,712
See Appendix
10-25 years (flexible)
At death/disability or
at 25 years (ICR
loans only)
At 2004 PPP, $1Cdn = US$.78 = A$1.08 = €.75 = NZ$1.17 = SEK 7.46 = £.48
†Assumes single student with no dependents with av$18,900 in outstanding debt (average debt). Will increase with family size.
‡ Assumes a single student with no dependents. Will increase with family size. The figure applies to deferments for economic hardship – other types
of deferments are possible but do not have an income test.
Among the countries in our survey, all except Sweden have such thresholds. The
thresholds vary in size from about $8,000 US (in the US ICR system) to about $24,000 US
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(in the Australian HECS system). The Canadian threshold (for the Interest Relief
program) is the only one that moves in relation to both debt and income levels 3 ;
however, assuming an average-size debt, Canada’s threshold is slightly higher than
most other countries at just under $20,000 US.
The second column shows the standard repayment rates in each country. Three
countries (Canada, the Netherlands and the some of the US programs) use standard
mortgage-style repayment rates. Germany is theoretically on a mortgage-style
repayment but in practice repayment is a flat 105 euros per month. New Zealand and
the UK have income-contingent systems with income above the threshold subject to a
standard rate of repayment of 10 and 9 percent, respectively. Australia has a series of 9
income bands above the threshold, with repayment rates varying between 4-8 percent.
Unlike New Zealand and the UK, however, Australia’s repayment applies to all income,
not just marginal income, which would seem to suggest that marginal taxation rates go
well over 100 percent at points approaching each of the band boundaries. The Swedish
system, as well as the US ICR and the US “graduated” systems, use very complex
formulae for setting repayment rates.
The third column shows the amortization period of various loan programs. Most of the
“hard” ICR programs do not have amortization periods. In the other programs,
amortization periods vary between 10 and 25 years. Canada’s standard repayment
period is the shortest at 9.5 years. The fourth and final column shows loan forgiveness
periods. Most countries do not have loan forgiveness; none permit it for a period shorter
than 15 years.
3
Technically, the threshold for interest relief is based on a combination of debt and income and then
adjusted for family size. It is an extremely opaque system which cannot be described as “client-friendly”;
indeed, none of the Canada Student Loan Program’s student information guides mentions the actual
eligibility thresholds, suggesting instead that students contact their provincial student aid office to see if
they are eligible.
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VI. Final Debt Burdens and Salaries after Graduation
Having now examined the many factors that affect how loans are repaid, it is now time
to turn to the real debts that graduates have at the time of graduation, as well as their
ability to repay these debts. Details of average graduate debt burdens and average
graduate incomes are presented in Table 6.
The first column shows the proportion of students that graduate with student debt in
each country. These figures vary widely. Generally speaking, the countries where loans
are effectively non-means tested (Australia, New Zealand, Sweden, and the UK) also
have the highest take-up rates. However, the Netherlands, which also makes its loans
available to all students regardless of means, has one of the lowest rates of student takeup. The US – which has one loan program that is means tested and one that is not – also
has a reasonably high take-up rate. Canada and Germany, both of which have
exclusively means-tested loans, have somewhat lower rates of take-up.
Table 6 – Estimated Average Government Debt at Graduation and Average Incomes of
Recent University Graduates 4
% of Graduates
with Debt
Average Debt at
Graduation
Estimated Annual Income of
Recent University Graduates
(approx.)
Australia
77%
$A 14,697
A$38,000
Canada
50%
$C 18,900
C$38,000
Germany*
15 – 20%
€5,600
€41,136
Netherlands
15 - 20%
€8,700
€28,000
New Zealand
(check)
$NZ 15,930
NZ$44,510
Sweden
85%
230 000 SEK
290 400 SEK
United Kingdom†
85%
£8800
£22,000
United States
50%
$US 19,300
US$34,100
At 2004 PPP, $1Cdn = US$.78 = A$1.08 = €.75 = NZ$1.17 = SEK 7.46 = £.48
4
Sources: Australia - author’s calculations based on annual HECS debt files from EPI Australasia. Assumes all graduates take a 4-year course.
Canada – National Graduates Survey 2000; Germany - BMBF (2005), Sechzehnter Bericht nach §35 de Bundesausbildungsförderungsgesetzes zur
Überprüfung der Bedarfsätze, Freibeträge sowie Vomhundertsätze und Höchstbeträge nach §21 Abs. 2, Berlin: Bundesministerium für Bildung und
Forschung. Netherlands – Belastingdienst (2004), Fiscale uitleg bij aangifte: Persoonsgebonden aftrek, Uitgaven voor levensonderhoud van een
kind jonger dan 30 jaar, www.belastingdienst.nl.; New Zealand – NZ Bureau of Statistics Student Loans Data 1997-2002, table 2; Sweden - Statistics
Sweden – “Entrance to the Labour Market 2004” UK – Association of Graduate Recruiters 2004, US - United States National Centre for Education
Statistics’ Baccalaureate and Beyond Study.
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The second column of Table 6 shows average debt levels at university graduation in
various countries in their national currencies 5 (the figures in a common currency – US
dollars – are shown in Figure 2, below). By some considerable amount, debt is highest in
Sweden: at current PPP values, average graduate debt in Sweden is just over $24,000 in
US dollars. This is more than a little peculiar, given that Swedish universities do not
charge tuition fees and all students are eligible to receive comparatively generous
student grants. Average debt in the US is next highest, followed by the UK and then
Canada. Student debt in the US and Canada is reasonably stable or only growing slowly
– the same is not true in the UK, where student debt is rising rapidly in conjunction with
higher tuition fees and higher loan limits. Student debt is considerably lower in the
Netherlands and in Germany than in the other six nations included in this study.
The third column shows estimated average annual income of recent university
graduates in various countries in their national currencies (the figures in a common
currency – US dollars – are shown in Figure 2, below). The data shown here are not
strictly speaking completely comparable. While all countries in the survey do have
similar types of graduate surveys to monitor labour market outcomes, these surveys
take place anywhere between 6 and 36 months after graduation. While this is a
limitation on data comparability, the data are nevertheless reasonably similar enough to
permit broad comparisons.
Figure 2 – Average Graduate Debt and Income Figures (in USD)
$45,000
$40,000
$35,000
$30,000
$25,000
$20,000
$15,000
$10,000
$5,000
$0
Ger
Ntl
Nza
UK
Aus
Debt
Incom e
Can
US
Sw e
5 Note that the figure for “average debt” is the subject of some debate in a number of countries. In New Zealand and Australia, governments do not,
as a rule, publish figures on average debt at graduation. The figure for NZ comes from a Statistics New Zealand survey and is the figure for average
debt in the final year of all students graduating between 1997 and 2002. Because average borrowing had increased over time, there is every reason
to believe that this figure would be somewhat higher for today’s graduates. Australia’s figure is derived by taking average annual HECS debt and
multiplying by four. UK figures are also disputed – the figure in table 6 is the one provided by HM Government, but a number of private surveys put
the figure well above where government administrative data suggests it is. Based on information provided to the authors by Claire Callendar, an
expert on UK student loans, we have chosen to use the Government’s figures over those from other surveys.
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VII. Calculating Debt Burdens
The final two tables in this paper show how the various loan program features end up
affecting borrowers in practice. Table 7 shows comparative data on student debt-toincome ratios and debt service burdens, as they apply to students with average debt
loads and average post-graduation incomes.
Table 7: Average Debt-to-Income Ratios and Debt Service Ratios
Average Debt
at Graduation
Estimated
Avg. Annual
Income of
Recent
University
Graduates
Debt-toIncome
Ratio
Estimated
Avg.
Monthly
Payments
Estimated
Avg. Monthly
Income of
Recent
University
Graduates
Estimated
Avg. Debt
Service Ratio
Australia
$14,697
A$38,000
38.7%
$126.67
A$3,166
4%
Canada
$18,900
C$38,000
50%
$209.83***
C$3,166
6.6%
Germany*
€5,600
€41,136
13.6%
€105.00
€3,428
3.1%
Netherlands
€8,700
€28,000
31%
€60.29
€2,333
2.6%
New Zealand
$15,930
NZ$44,510
36%
NZ$236.15
NZ$3,709
6.4%
Sweden
230 000 SEK
290 400 SEK
79%
914.36 SEK
24200 SEK
3.8%
United
Kingdom†
£8800
£22,000
40%
£90
£1833
2.9%
United
States**
$19,300
US$34,100
57%
US$108.00 –
US$189.68***
US$2842
3.8 – 6.7% **
At 2004 PPP, $1Cdn = US$.78 = A$1.08 = €.75 = NZ$1.17 = SEK 7.46 = £.48
* Under a strict 20-year amortization scale, German students’ repayment rates would be about €37/month, or just over one percent of monthly
income; however, there is a minimum payment of €105/month.
** The lowest figure is for “graduated” repayment over 25 years; the highest figure is for “standard” repayment over ten years. Burdens of other
repayment options, including income-contingent loans, fall between these two figures.
*** Canadian and American borrowers also benefit from tax credits which would lower their repayment amounts somewhat. In Canada, a student
paying $209.83 per month would receive tax credits that would lower his/her payments by approximately $18/month, which would make “net”
payments approximately $191.83/month. In the United States, the size of the tax deduction tax deductions would depend on the interest paid (which
is a function of the length of amortization period) and the student’s tax bracket; assuming a 10-year repayment period and a 15 percent tax rate, the
reduction would be on the order of $14/month.
The first and second columns of Table 7 simply restate data first presented above in
Table 6. The third column divides the first column by the second to arrive at a single
cross-nationally comparable figure for debt-ratios of graduates with “average” debts
and incomes. Debt-to-income ratios of this kind are technically not accurate measures of
debt burden in that they represent a stock versus flow comparison. Nevertheless, this
type of ratio is often used to represent the burden of national or household debt, and
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indeed within Canada is a rule of thumb used in calculating the suitability of borrowers
for mortgages (mortgage applications are usually denied if the debt-to-income ratio
exceeds 40 percent).
There is considerable variation between countries in debt-income ratios, from a low of
13.6 percent in Germany (where loans are small in size and hard to obtain) to a high of
over 70 percent in Sweden (where loans are large and carry no needs test). Most
countries have debt-to-income ratios of between 30-40 percent, while Canada is at 50
percent and the US is at 57 percent.
The fourth column shows the monthly payments expected on an “average” debt,
following the various national loan repayment conditions that are shown in Table 5.
Column 5 restates column 2 – annual income – in monthly terms. Column 6 divides
column 4 by column 5 in order to determine the average debt service ratio (that is, the
fraction of monthly pre-tax income required to service a debt) in each country, given
average debts and average incomes. This is perhaps the best measure of how debt
actually affects graduates. New Zealand and Canada have the highest rates of debt
burden at over 6 percent. Australia and Sweden are somewhat lower at between 3.8 – 5
percent. The United States has a range of possible debt burdens between 3.8 and 6.7
percent, reflecting the fact that students can—under the Direct Lending program—
choose both the length of time over which a loan can be amortized (anywhere between
10 and 25 years) and the type of repayment program (standard amortization, graduated,
or income-contingent). Germany is next at 3.1 percent, followed by the UK at 2.9 percent.
The debt repayment burden is lowest in the Netherlands at 2.6 percent of pre-tax
income.
The real effect of different countries’ debt repayment management schemes is probably
best explored by comparing the difference between debt-income ratios (column 3) and
debt burden ratios (column 6). The rank order of countries in debt burden is very
different in these two columns; New Zealand, for instance, which has a relatively low
debt-to-income ratio, has a very high debt burden ratio. Conversely, Sweden, which has
a very high debt-to-income ratio, has a very low debt burden ratio.
There are two principal reasons for the divergence of outcomes between the debtburden measure and the debt servicing measure. The first, and probably most
important, is the rate of interest charged on student loans. It is no coincidence that the
three countries with the highest debt-service ratios are also the three countries with the
highest interest rates – indeed, the only three countries that use revenue from student
loan interest to cross-subsidize other aspects of the loan system.
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The second important factor here is the length of the repayment period. Most countries
allow students a relatively long period to repay their loans – 15 years or more. In the
case of Canada and some of the American programs, the short period of time to
repayment is another factor pushing up the monthly repayment burden. Even here,
however, a distinction needs to be made. In the US, the individual can reduce monthly
payments by extending the loan period; Canadian borrowers, on the other hand, do not
have this privilege and this makes an enormous difference to their monthly debtservicing charges. For instance, if Canadian borrowers could extend their payments to
15 years their monthly payments would drop by 25 percent , thus bringing debt
repayment burdens down under 5 percent of income. 6
Table 7 is useful in dealing with averages, but it is important to remember that most
students are not at the average. Table 8 therefore extends the analysis somewhat to look
at different national systems where debt and income are either higher or lower than
average. For the purposes of this exercise, we have stipulated that “high” and “low”
graduate income refer to situations where income is 133 percent and 66 percent,
respectively, of the average graduate income portrayed in Table 8, while “high” and
“low” debt refers to debt that is 150 percent and 50 percent , respectively, of the average
debt reported in Table 8.
Table 8 – Estimated Debt-Service Ratios for Various Debt and Income Scenarios
High Income,
Low Debt
High Income
High Debt
Average
Debt,
Average
Income
Low
Income,
Low Debt
Low Income,
High Debt
Australia
6%
6%
4%
0%
0%
Canada
2.6%
8.0%
6.6%
5.2%
0%
Germany
2.3%
2.3%
3.1%
4.6%
4.6%
Netherlands
1.0%
2.9%
2.6%
2.0%
5.9%
New Zealand
7.3%
7.3%
6.4%
4.5%
4.5%
Sweden
1.8%
5% *
3.8%
3.6%
5% *
United Kingdom
4.4%
4.4%
2.9%
0%
0%
United States**
1.3-2.5%
4.2-7.6%
3.8 - 6.7%
2.8-5.0%
8.6-15.3%
N.B. Low debt = 50 percent of average debt and high debt = 150 percent of average debt; low income – 66 percent of average income and high
income = 133 percent of average income
6
The total amount of interest paid over the life of the loan would, however, rise. Objections on this score could of course be eliminated by providing
an extended repayment period as an option rather than a mandatory feature of the repayment program – those borrowers that preferred lower total
interest payments costs to lower monthly interest payments could remain on the existing 9.5 year plan. Currently, extensions of the repayment period
to 15 years are only available to those borrowers who have been receiving interest relief for considerable periods of time – i.e. only to the very
poorest.
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* Under the standard formula, repayment for “high debts” would be 5.4 percent of income at “high income” and 10.8
percent of income at “low income”; however Swedish student aid caps repayments at 5 percent of income.
** Low figure is for “graduated” repayment, high figure is for “standard” repayment. Burdens of other repayment options,
including income-contingent loans, fall between these two figures.
The picture that emerges from Table 8 is a complicated one, but a simple message
emerges nevertheless. No single loan program can be considered “attractive” to students
regardless of their income and debt levels. Programs that work for one set of borrowers
usually do not work well for another. This is another way of saying that the advantages
and disadvantages of different student loan debt management systems varies
considerably according to one’s income and outstanding debt.
Apart from this simple message, four subsidiary lessons can be learned from this table:
•
Given the conditions on debt and income set here, the UK, Australia, and
Canada—the three countries with the most generous loan income thresholds—
are probably the best places to be if one is a borrower with low income and high
debt. Care should be taken in interpreting this, however. Should the Canadian
student’s income rise even slightly from the level shown here, he or she would
lose eligibility for interest relief and would be required to pay the full amount of
the loan. In this case, the debt service ratio would suddenly become the worst of
the bunch, at just over 16 percent of pre-tax income. Australia, however, because
of its generous income thresholds and low initial rates of repayment, does not
•
suffer from this problem.
High earners have lower debt-service ratios under conventional mortgage-style
systems than they do under “hard” income-contingent loan systems. This may be
somewhat misleading, however, as some high earners undoubtedly pay more
than the required minimum in these programs so as to avoid interest charges.
Conversely, of course, this implies that “hard” ICR systems can be much harsher
on high-income borrowers than non-ICR systems.
•
Low earners generally have lower debt-service ratios in “hard” incomecontingent systems than they do in mortgage-style systems. However, as the
example of Canada shows, all it would take to change this is a more generous
system of income-contingent deferrals. In the Netherlands, New Zealand, the
United States, and Germany, the cut-off for assistance is approximately 50
percent, 36 percent, 31 percent, and 28 percent of average graduates’ salaries,
respectively, which are too low to help the “low-income student” used in this
example.
•
In the “worst-case” scenario of having low income and high debt, the United
States is clearly the worst place to be – in no other country do repayments of
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students in this position exceed 6 percent of income, whereas in the US the
proportion can be as high as 15.3 percent .
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VIII. Conclusions
The point of this paper is not to comment on whether a particular level of student debt is
“too high” or “too low” (points which are largely subjective), or whether or not the
prospect of debt is actually a deterrent to study (a point where the evidence is somewhat
mixed and certainly varies from country to country). Rather, the intention is to show
that while different countries possess very different student debt profiles which can be
compared; they also have very different graduate income profiles and very different
conditions of student loan repayment which must be taken into consideration in any
serious scheme of comparison. Simply measuring student debt is a completely
inadequate way of looking at the consequences of student debt.
A comparison which illustrates this point nicely is one between students from Sweden
and New Zealand. Swedish students graduate, on average, with much higher levels of
student debt than students in other countries, but their debt burdens are comparatively
very mild because of the very low interest rates they pay and because of the very long
loan repayment period they are afforded. Conversely, New Zealand students do not
graduate with enormous amounts of debt in comparative terms, but the high levels of
interest, the low income threshold and the high rate of marginal repayment combine to
make the loan repayment burden a very heavy one.
Similarly, the fact that a country has a system that is formally “income contingent”
seems to make precious little difference in terms of loan repayment burden. Though this
may seem surprising to those partisans on either side of the ICR debate, the conclusion
is not that surprising – materially, debt burdens are a product of outstanding principal,
interest rates and repayment conditions, none of which, technically speaking, are
necessarily linked with income-contingency per se.
Moreover, how “good” any given country appears to be on student debt varies
considerably based on a variety of factors, including an individual student’s income and
outstanding debt. Germany and the Netherlands might be seen as “good” in terms of
having low student debt, but the actual debt burdens of low-income graduates are
considerably worse than they are in countries such as the UK, Australia and—at least
among highly indebted borrowers—Canada as well.
The lessons for any countries looking to lighten student debt burdens via changes in
debt repayment mechanisms are fairly clear. They are:
•
“Income-contingency” is a panacea only for the intellectually lazy. Far more
important are the amounts of debt issued and the conditions of loan repayment.
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•
Interest rates matter – a lot. The main reason why graduates in New Zealand,
the United States, and Canada face high debt service ratios is that they all face
punishing rates of interest during the repayment period. Curiously, these
countries also follow a policy of subsidizing interest while students are in school.
It seems likely that all three countries could—at little or no cost to the treasury—
ease students’ debt burdens somewhat by imitating their European and
Australian counterparts and giving students a single, low-interest rate for the life
of the loan.
•
The length of the repayment period is a key variable. The debt burdens of
students in some countries are notably less where repayment periods are longer.
Where interest is subsidized, this amounts to a progressive subsidy; those
students who pay back more money over a longer period of time receive the
greatest subsidy. Where interest is not subsidized, longer repayment periods
force a trade-off: lower short-term payments can only come at the expense of
higher total interest payments over a longer period of time. The US, which allows
students to choose their own repayment period, probably has the most sensible
policy in this regard, and policy makers in New Zealand and Canada would be
wise to examine this relatively cost-free option to improve borrowers’ capacity to
•
repay.
Total debt matters – but less than most people think. Debt burden is not, of
course, insensitive to total debt issued, but the Swedish example shows that even
very high amounts of debt can be easily sustained given generous interest rate
and repayment policies. Solutions to student debt that involve blanket reductions
in lending can have harmful effects if they result in less money getting into
students (as was the case when Australia eliminated the loan component of
AUSTUDY without a corresponding increase in grants), or can create windfall
gains to the many students who could easily have paid the original, higher debt.
This is not to say that governments should deliberately go out and increase
student debt; merely to say that reducing student debt directly may not be the
most efficient or effective way to help those borrowers most in need of
assistance.
In short, details matter when it comes to student loans and student loan repayment.
Advocates of particular “silver bullet” solutions to the problem of student debt, such as
blanket loan reductions or the introduction of income-contingent loans, are almost
always guilty of oversimplifying the burdens that face students and/or the choices that
face governments. National differences in student loan repayment policies have created
real laboratory experiments that demonstrate the difference that even small program
parameter changes can make to the experiences of student loan borrowers. It is in the
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interests of students everywhere that policymakers pay closer attention to the results of
those experiments.
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Bibliography
Albrecht, D. & Ziderman, A. (1991). Deferred cost recovery for higher education:
Student loans in developing countries (Vol. 137). Washington, D.C.: The World Bank.
Junor, S. and A. Usher (2004). The Price of Knowledge 2004: Access and Student Finance in
Canada. Montreal, QC: Canada Millennium Scholarship Foundation.
Kirshstein, Berger, Benatar and Rhodes (2004), Workforce-contingent Financial Aid:
How States Link Financial Aid to Employment.7
NASSGAP (2004) Workforce-contingent Financial Aid: How States Link Financial Aid to
Employment: available at http://www.luminafoundation.org/research/Workforce.pdf
Usher, A (2005). Much Ado About a Very Small Idea: Straight-Talk on Income-Contingent
Loans. Toronto: Educational Policy Institute. Available at:
www.educationalpolicy.org/pdf/ICR.pdf .
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Appendix
Country Profiles –
Australia
Canada
Germany
The Netherlands
New Zealand
Sweden
United Kingdom (England & Wales)
United States
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Australia
Description: “Student Aid” as it is known in North America, is divided in two systems;
one for living expenses and one for tuition. The living expenses system is, as of 2003,
completely grant-based. The system for tuition is known as the “Higher Education
Contribution System” or “HECS” and is effectively loan-based (although the Australians
tend not to view HECS as a “loan” it shares many important features with loans).
Each year, students are charged a “HECS contribution” (effectively a tuition fee)
according to the course of studies undertaken. After the end of the period of studies, the
sum of these annual contributions must be repaid in an income-contingent manner. No
real interest is charged, though the outstanding balance does increase with inflation.
Repayment is managed through the Australian Tax System. Students reporting taxable
incomes below a certain threshold are not required to make payments. Above the
threshold, debtors must repay a percentage of their total income towards their
outstanding debt. This percentage increases progressively with earned income. HECS
obligations do not discharge and remain with the debtor until death.
HECS contributions can be paid up-front instead of afterwards in an income-contingent
manner. Students who choose to pay up-front receive a 25 percent rebate on their fees.
The rebate is partially an inducement to obtain contributions without the decade-long
wait that accompanies HECS contributions re-paid via income-contingent payments; it is
also a way of equalizing the net present value of the payments of early-payers and latepayers (the latter pay less in net present value terms due to the real interest subsidy on
the loan).
History: Prior to the 1988 introduction of HECS, tuition was free in Australia and there
were no loans (assistance was provided in the form of a grant). The major changes to the
HECS system have been changes to the fees rather than the repayment system. The
repayment system has seen some minor changes over the years to the threshold rate of
repayment, as have the income “bands” in which different percentages of income are
required for repayment.
The introduction of income-contingency was part and parcel of the introduction of
tuition fees. HECS – with its generous repayment subsidies and very high thresholds
beneath which no contribution need be made – was seen as a necessary complement if
the introduction of fees was to be credibly depicted as “progressive” (HECS was
introduced by a labour government which felt that free fees to university student were
actually regressive).
Subsidies During the Study Period: No real interest is charged on loans (outstanding
balances increase only by the amount of inflation/CPI). Government subsidy is equal to
the difference between the government’s cost of borrowing and the prevailing rate of
inflation.
Loan Remission/Forgiveness at Graduation: None
Subsidies During the Repayment Period: No real interest is charged on loans
(outstanding balances increase only by the amount of inflation/CPI). Government
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subsidy is equal to the difference between the government’s cost of borrowing and the
prevailing rate of inflation.
Targeting of Subsidies: Subsidies are not targeted. All HECS borrowers receive the
same subsidy on an annual basis. Over the course of borrowers’ lives, the largest
subsidies go to those who were in more expensive courses or stayed in school the
longest (and hence had higher debts) and those whose post-graduation incomes
remained low for long period of time (and hence paid off their contribution more
slowly).
Average Per Student Value of Subsidies: unknown
Total Cost to Government of Loan Subsidy: Approximately $300 million
Loan Collection Procedure: Debt is collected through the Australian Tax Office.
Maximum Debt Permitted to Carry: None
Average Debt at Graduation: $A14,697 (estimate)
Income Threshold Below Which No Loans Are Repayable: For the 2004-05 tax year, the
threshold is $A 35,000.
Loan Repayment Rate Above the Threshold: Repayment rates over the threshold are a
percentage of total (not marginal) income, as follows:
HECS Repayment Income
Percentage Rate to be Applied
Below $35,000
Zero
$35,001 - 38,987
4%
$38,988 - 42,972
4.5%
$42,973 – 45,232
5%
$45,233 – 48,621
5.5%
$48,622 - 52,657
6%
$52,658 - 55,429
6.5%
$55,430 - 60,971
7.0%
$60,972 - 64,999
7.5%
$65,000 and above
8.0%
Loan Amortization Period: indefinite
Most Recent Interest Rate on Student Loans: Equal to CPI. Most recent figure is 2.4
percent
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Canada
Description: Students who graduate have six months in which to consolidate their
various student loans. In practice, loans are repaid on a standard mortgage amortization
schedule over 9.5 years (10 years if the 6-month grace period is included). In certain
cases, where students run into serious repayment difficulties, the amortization period
may be extended over 15 years. Loans are interest bearing at a rate equal to prime plus
2.5 percent . Repayments are made to a company which operates the program on behalf
of the Government of Canada.
Interest paid on student loans is rewarded with a non-refundable tax credit of 16
percent. Borrowers in Repayment (BIRs) with high debt-income ratios may apply for
Interest Relief (IR) and suspend payments temporarily with no interest accruing. Their
9.5 year term resumes once the student leaves IR, meaning that these students are on
repayment plans that take more than ten years to complete. Students who exhaust
interest relief may be eligible for Debt Relief in Repayment (DRR), in which a portion of
existing principal is written off.
History: The ten-year repayment process has been in place since the program’s inception
in 1964. Interest relief was introduced in 1984, and expanded in 1995, 1998 and 2000.
Debt Relief in Repayment was introduced in 1998, as was the Student Loan Interest Tax
Credit.
Subsidies During the Study Period: Zero nominal interest (negative real interest)
Loan Remission/Forgiveness at Graduation: Varies by province. Most recent figures
suggest that $249.9 million was given out in loan remission in 2002-03 to approximately
90,000 individuals (97,889 individual loan remissions were issued, but some students
may have received remission from both their provincial governments and the Canada
Millennium Scholarship Foundation). This implies that the average loan remission was
worth roughly $2,775 per recipient.
In-Study Interest Subsidy: $150 million
Subsidies During the Repayment Period:
a) There are no subsidies built into the loan system, but borrowers receive a nonrefundable tax-credit worth 16 cents for every of dollar of interest paid during
the year.
b) For those low-income BIRs who qualify, government will pay the interest while
the BIR’s debt-income ratio remains high (known as Interest Relief).
c) Debt Relief in Repayment, which reduces outstanding student debt by 50 percent
or $26,000 (whichever is smaller) for those students who exhaust Interest Relief.
Targeting of Subsidies:
a) Tax Credits: None. All borrowers receive the same credit. Those who pay more
interest (i.e. those who took out more debt) receive a larger amount of subsidy.
b) BIRs with high debt-income ratios (principally low-income BIRs)
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c) BIR’s with chronically high debt-income ratios (i.e. those where interest relief
lasts for more than 36 months 7 )
Average Per Student Value of Subsidies: 8
a) $100 annually per student to 706,980 BIRs
b) $546 per recipient per year
c) $6068 per recipient per year
Total Cost to Government of Loan Subsidy 8 :
a) $70 million per year
b) $76.7 million per year
c) $5.3 million per year
Loan Collection Procedure: The National Student Loans Service Centre (NSLSC), a
privately-run organization under contract to the Government of Canada, manages loan
collection. BIRs may either send cheques to the NSLSC, or enrol in a pre-authorized
payment plan which permits NSLSC to withdraw the required amount on a monthly
basis.
Maximum Debt Permitted to Carry: Limits on borrowing in Canada tend to be annual
maximums, not per-degree or lifetime limits (although some provinces impose these
kinds of limits). In theory, a single student without dependents with 4 years of
university, who borrowed for all four years, could incur $37,000 in debt. In practice,
given the way the Canada Millennium Scholarship Foundation and various grant
programs work, it is difficult to incur more than $30,000 in debt over four years.
Presence of children and longer periods of study could easily bring this figure to as high
as $100,000 in rare cases.
Average Debt at Graduation:
likely decreased since then.
$18,900 ($21,500 in CSL zone), as of 2000, but has
Income Threshold Below Which No Loans Are Repayable: Because this is a debtburden-to-income ratio, the threshold depends on both the income level and the size of
the debt. For a single student with the “average” amount of debt at present interest
rates, the threshold is approximately $24,000.
Loan Repayment Rate Above the Threshold: Depends on the amount of debt (standard
mortgage-style amortization.)
Loan Amortization Period: Generally speaking, 9.5 years.
Most Recent Interest Rate on Student Loans: Prime (4.25% as of Jan. 26, 2005) + 2.5% =
6.75%
7
There are some circumstances in which 36 months of IR does not qualify for DRR; in these circumstance,
DRR may be delayed for 54 months – however, IR is extended accordingly.
8
Values refer only to costs to the Government of Canada. Canada has a largely integrated federalprovincial system of student aid. Adding the costs of provincial government expenditures on these items
would add roughly 66 percent to the values shown here.
www.educationalpolicy.org
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Educational Policy Institute
Germany
Description: Higher education students receive student assistance (BaföG) of which 50
percent is a grant and 50 percent is a loan.
BAföG loans are administered and called in by the Federal Office of Administration
(Bundesverwaltungsamt). Students receive a grace-period on repayment which lasts five
years (very long by international standards). Loans are interest-free and repayable
within 20 years after the start of repayment. Due to low income the repayment period
can be extended to 30 years maximum. The obligation to repay begins five years after
the expiry of the maximum period of training assistance. At the moment, the minimum
monthly rate for repayment amounts to €105. The obligation to repay the loan may be
waived if the income of the grantee does not exceed specific tax-free allowances, s/he is
caring for a child under the age of 10 or for a handicapped child, or only marginally
employed. In addition, students who belong to the best 30 percent of examinees in their
year may, on request, be released from the obligation to repay the loan in full (25 percent
of their debt can be waived). Finally, no one has to repay more than EUR 10.000 even if
the received loans exceed this amount.
Since 2001 advanced students can apply for not means-tested bank loans within a special
credit program by the federal “Kreditanstalt für Wiederaufbau” (KfW). The KfW loan
has a maximum of €585 per month. The repayment conditions for loans granted by KfW
are less generous. There are no merit-based releases and the period of repayment begins
only six months after having received the last loan. The loans also bear an interest rate
on the basis of Euro Interbank Offered Rate (EURIBOR) plus one percent (currently 4.5
percent ).
History: The German BAföG that was established in 1971 has gone through some
changes over time. In 1982, the 50 percent grants and 50 percent loans basis was changed
into a full interest-free loan system. Since 1984 the best students from each cohort can get
part of their debt waived. In 1987, the loan system was changed back to a 50 percent
grants and 50 percent loans system. The basic repayment system has remained more or
less intact over the past thirty years, however.
Subsidies During the Study Period: Zero nominal interest
Loan Remission/Forgiveness at Graduation: There are three forms of loan remission
available.
A) The first is a blanket forgiveness of loans over €10,000, which has been in
place since 2001. The cost of this measure is unknown, though since borrowing is
fairly low overall, it does not seem that many people benefit from it.
B) The second form of loan remission is available to students who are in the top
30 percent academically of their graduating cohort receive remission of between
15 and 25 percent of their debt. Roughly 12,000 students receive this annually
C) The third form of remission is given to students who complete their programs
early. 5,200 students received this in 2003.
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Educational Policy Institute
Subsidies During the Repayment Period: There are two different subsidies available in
Germany:
A) The interest-rate on loans is zero, which means that real interest is negative.
B) Borrowers in Repayment (BIRs) who have to care for a child under the age of
ten, or for a child with disabilities, or are only marginally employed, have their
entire debt waived.
Targeting of Subsidies During the Repayment Period:
A) All Borrowers in Repayment receive the interest subsidy to the same degree –
those who borrowed more heavily therefore receive a larger amount of subsidy.
B) Those ending up caring for children or in a difficult labour market position get
exemption from repayment.
Average Per Student Value of Subsidies in the Repayment Period:
A) The value of the loan subsidy was worth approximately €186 per borrower in
2004.
B) Students who received the loan waiver received approximately €1,256 each.
Loan Collection Procedure: Normally students start repaying their debt five years after
graduation (for the Bankdarlehen this is 6 months). A central administrative body, not
only for student support but for all kind of public services, the Bundesverwaltungsamt,
administers the student loans debt and notifies a graduate when repayments have to
start and how much. This Bundesverwaltungsamt informs the central bank
(Bundeskasse in Düsseldorf) about the debt to be collected. Then the debt will be
collected monthly, either by invoice or by authorised automatic withdrawal.
Maximum Debt Permitted to Carry: €10,000, but anything above this is forgiven.
Average Debt at Graduation: After various forms of remission, €5628.
Income Threshold Below Which No Loans Are Repayable: If monthly earnings do not
exceed €960, one may defer repayments until one’s income rises above the threshold
again. The threshold is somewhat higher if the student has a spouse/partner or children.
Loan Repayment Rate Above the Threshold: Mortgage-style repayment with a
minimum 105 euros per month.
Loan Amortization Period: In theory, 20 years; however, minimum monthly payments
of 105 euros per month plus a maximum debt of 10,000 euros and no interest rates
means that in practice it is difficult to repay loans in more than eight years.
Most Recent Interest Rate on Student Loans: zero nominal (negative 2 percent real)
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Educational Policy Institute
Netherlands
Description: After graduation, borrowers get a grace period of 2 years in which they do
not have to make any repayments. After this grace period, the repayment period starts
(also for all accumulated interest during study). All student debt must be repaid within
a period of 15 years. Repayment happens according to an annuity or mortgage-type
schedule. Total debt (including accumulated interest) is calculated which leads to fixed
monthly instalments. Over time the monthly instalments can change a little due to
changes in the interest rate. The minimum monthly instalment is €45 (so total repayment
can be sooner than 15 years in some cases). Students can also voluntarily make
additional repayments of any amount over €45, without any additional costs.
If graduates have difficulties in repaying their monthly instalments, they can ask for a
means-test (on an annual basis), based on which monthly repayments can be reduced in some cases, even to zero. Any remaining debt after 15 years is cancelled. Loans are
interest-bearing, even when students are in university, with an interest rate of 3.35
percent in 2004 (3.05 percent in 2005).
History: Since the early 1950s, low-income students with excellent academic
performance could get interest-free loans. In 1986, all family support, grants and loans
were put together in one system of direct support for students, including basic grants for
all fulltime students, mean-tested grants for low-income students and voluntary loans
for all students. If students run out of grant-entitlements, they can still get three years of
full loans financing (was 2 years before 1996). Since 1991, students can also take up
additional loans if their parents do not make the expected parental contributions. From
1992 onwards the loans carry interest (to prevent students making a profit with public
money). Since 1996, all grants are given as initial loans as well which have to be repaid
under the same conditions if students do not meet their study progress requirements.
Subsidies During the Study Period: The government does not subsidize loans, but it
does provide them to students at below-market rates (equal to the government cost of
borrowing).
Loan Remission/Forgiveness at Graduation: None
Subsidies During the Repayment Period: The government does not subsidize loans,
but it does provide them to students at below-market rates (equal to the government
cost of borrowing). Loans are forgiven after 15 years.
Targeting of Subsidies: While the loan interest subsidy is not targeted, loan forgiveness
is targeted to long-term “poor” borrowers.
Average Per Student Value of Subsidies: Not available.
Loan Collection Procedure: Repayments are made to an arms-length government
agency known as the Informatie Beheer Groep (Information Management Group; IBG).
Students and graduates communicate with the IBG about getting grants, loans,
questions, etc. The IBG calculates the total debt and what the monthly repayment
instalments are. Then the graduate writes a monthly cheque or one can have the
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Educational Policy Institute
required amount automatically withdrawn (in which case the IBG has to be authorised
by the debtor.) In the latter case one gets a reduction of €9 per year. If graduates get into
default (after 3 cheques have not been paid), the Dutch national debt collection
mechanism (with a network of debt collectors and closely tied to the judicial system) is
used.
Maximum Debt Permitted to Carry: Technically, there is no maximum but in practice
the maximum is roughly €70,000.
Average Debt at Graduation: €8,670
Income Threshold Below Which No Loans Are Repayable: Graduates with low
incomes can ask for a means-test. This calculates whether one can repay the required
amount, a lower amount or not at all (for the duration of one year). Normally the income
of 2 years before is used, except in cases of a serious drawback (at least -15 percent) or
unemployment. The means-test also takes into account one’s family situation (e.g.
having children or not, being married and the income of the partner.)
In 2005 (thus the income of 2003) the income threshold for a single adult (no partner, no
children) is €13,870; below that amount one does not have to repay. The capacity to pay
with an income of €13,870 is €641 per year or €53 per month. The capacity to pay
increases with income: at €15,000/year it is €820 or €68/month; at €20,000/year it is
€1950 or €162/month, and so forth.
Loan Repayment Rate Above the Threshold: Depends upon outstanding debt (normal
mortgage-style repayments)
Loan Amortization Period: 15 years
Most Recent Interest Rate on Student Loans: 3.05 percent (2005)
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Educational Policy Institute
New Zealand
Description: Loan repayment is handled by New Zealand’s Inland Revenue
Department. Borrowers-in-Repayment (BIRs) earning more than NZ $16,172 (the figure
is indexed to inflation – figure here is for 2004/05) must pay 10 percent of all income
over this amount towards their loan repayment. No repayment is required by those
earning less than $15,964. Repayments are generally deducted at source by employers.
Real interest is charged on the loan.
The scheme has two forms of interest: “base rate” interest (equal to the Government’s
cost of borrowing) and “interest adjustment” (equal to CPI). BIRs earning less than
$16,172 are not charged base interest (a subsidy known as a “base interest write-off”).
BIRs earning more than $16,172 but whose calculated repayment is less than the
accumulating interest on outstanding loans are charged only partial interest (known as a
“base-interest reduction”) to ensure that the loan balance does not increase over the
course of the year (i.e. that “negative amortization” does not occur).
History: Prior to 1992, there were neither tuition fees nor student loans. The present
system has existed more or less unchanged since 1992.
Subsidies During the Study Period: Zero nominal interest (i.e. negative real interest) for
full-time students. Students studying at less than 80 percent of full-time may receive
zero interest subject to an income test; otherwise, they pay the zero real interest (i.e.
loans do increase with the cost of inflation).
Loan Remission/Forgiveness at Graduation: None
Subsidies During the Repayment Period: Borrowers whose net income is below the
repayment threshold receive a very small subsidy, equal to the difference between the
government cost of borrowing and the “interest adjustment rate” (which is actually
slightly below CPI). At the moment, this gap is roughly 5 percentage points.
Targeting of Subsidies: Low-income BIRs
Average Per Student Value of Subsidies: Base-interest write-offs worth on average
$575/recipient. Interest reductions worth on average $520/recipient.
Loan Collection Procedure: Collection handled through the tax system, collected mostly
through employer deductions on biweekly pay packages.
Maximum Debt Permitted to Carry: None, although in practice it would be difficult to
carry much more than $NZ 60,000 for four years of study, as maximum assistance is
$7,500 plus $150 in living expenses per week of study. Longer periods of study would of
course increase this.
Average Debt at Graduation: $NZ 15,930
Income Threshold Below Which No Loans Are Repayable: $NZ 16,172
Loan Repayment Rate Above the Threshold: 10 percent
Loan Amortization Period: None
Most Recent Interest Rate on Student Loans: 7.0 percent
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Educational Policy Institute
Sweden
Description: Repayment of Swedish loans is described as a “modified annuity loans
system”. It is similar to the “Graduated Repayment Option” offered under the US Direct
Loans System. Repayment amounts are calculated annually based on a formula that
takes into account a student’s outstanding debt, the prevailing interest rate and an
annual escalator.
History: Prior to 1988, student loans were of the mortgage-style variety with fully
subsidized interest. In 1988, the country moved to an income-contingent loan system,
where loan payments were a flat 4 percent of income (although voluntary repayments
could of course be made) with only partially subsidized interest. The plan was changed
in 2001.
Subsidies During the Study Period: Government subsidizes interest rate by 30 percent .
Loan Remission/Forgiveness at Graduation: None
Subsidies During the Repayment Period: Government subsidizes interest rate by 30
percent .
Targeting of Subsidies: None. All students receive the same subsidy, so students
Average Per Student Value of Subsidies: Unclear. At graduation, with average debt of
230,000 SEK, subsidy would be equivalent to 1 percent or 2,300 SEK per year, falling
thereafter.
Loan Collection Procedure: Payment is normally due quarterly, though monthly
procedures can be arranged. Payment is made directly to a government agency (the
Swedish National Board of Student Aid) by cheque, or direct deposit arrangements can
be made. There is no use of the tax system for collection.
Maximum Debt Permitted to Carry: Maximum regular and supplemental loan
entitlement over six years (maximum period of student aid use) is 318,480 SEK;
however, use of the additional loan scheme, which covers tuition fees (largely at foreign
institutions, since tuition is free in Sweden), certain forms of travel, musical instruments,
and personal insurance for studies abroad, is unlimited and could add to this total.
Average Debt at Graduation: 230,000 SEK
Income Threshold Below Which No Loans Are Repayable: Not applicable. All
borrowers must at a minimum pay five percent of their income towards their loan
repayment.
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Educational Policy Institute
Loan Repayment Rate Above the Threshold: the required amount of annual loan
repayment is calculated according to the following formula:
Where:
At = Payment for the year
L = outstanding debt at the start of the year
r = interest rate
p = annual percentage increase in repayment base (effectively 2 percent).
n = number of years remaining on the loan
In practice, what this means is that at current interest rates annual payments start at just
under 5 percent of outstanding debt, and increase by a little over 2 percent per year
thereafter. The formula is sensitive to interest rates, however. If interest rates were to
double to 6 percent, the initial payment would increase to about 7 percent of
outstanding debt and would increase by more in subsequent years.
If payments become too onerous, one can apply to have them reduced to a maximum of
5 percent of income.
Loan Amortization Period: 25 years
Most Recent Interest Rate on Student Loans: Interest is equal to the government’s
average cost of borrowing over the three previous calendar years, minus 30 percent
subsidy. Currently, 3.1 percent (2004).
www.educationalpolicy.org
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Educational Policy Institute
United Kingdom
Description: Under the current loan scheme, graduates repay their student debt through
an income related repayment system. As of April 1, 2005, they pay 9 percent of all
income over £15,000 as student debt repayments. Repayments are collected through the
tax system (Inland Revenue; IR), which in the UK means that the employers have to
withdraw the amount from a person’s gross income and hand it (earmarked) in to the
tax authorities.
The Student Loans Company (SLC) works with the Inland Revenue to collect
repayments. Repayments are deducted at source by the employer and shown on pay
statements. For self-employed students the repayments are collected through the tax
self-assessment system. Students may repay earlier than required without additional
costs.
History: In 1990 student loans were introduced in the UK for the first time. This was a
mortgage-type of repayment system with a 10 years repayment period. The loans were
carrying a zero rate of real interest.
This system was changed into the current one in 1999, when all maintenance grants
were abolished and turned into loans. Loans retained the zero interest rate. On the
advice of Lord Dearing (chair of the influential 1997 Commission of Inquiry into Higher
Education), an income-contingent system of repayment was chosen.
Subsidies During the Study Period: Students pay zero real interest.
Loan Remission/Forgiveness at Graduation: None
Subsidies During the Repayment Period: Students pay zero real interest.
Targeting of Subsidies: Graduates who earn the least take the longest period to repay
their debt, and therefore will in the end have received the largest indirect subsidies.
All outstanding debt will be cancelled if one dies or reaches the age of 65.
Graduates who never reach the threshold income £15,000 will never repay and get the
highest subsidies.
Students who earn little over the threshold only repay their debt very slowly and thus
also benefit a lot from the interest subsidies.
Average Per Student Value of Subsidies: Roughly 3 percent of the outstanding value of
the loan annually (this is the difference between inflation and the government’s cost of
borrowing). On an outstanding debt of £8,800 (the average at graduation), this will come
to approximately £220.
Loan Collection Procedure: When a student graduates, the Student Loans Company
(who deals provides all student loans and grants) indicates to the IR how much debt the
graduate has. The IR links this information to one’s National Insurance number and
provides the information to the employer of the graduate. The employer has to make
sure the correct amounts are withdrawn from one’s salary and are liable to penalties if
they do not provide correct information to the IR. The IR supplies employers with tables
showing how much to deduct. The IR notifies SLC at the end of each tax year what
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Educational Policy Institute
repayments have been made and transfer the money to SLC, who will credit the
individual’s account.
Maximum Debt Permitted to Carry: Students who live in London can at maximum
accumulate a student debt of £15,000 for a 3-year bachelor degree. This is £12,000 for
students outside London and £10,000 for students living with their parents.
Average Debt at Graduation: Government estimates student debt at £8,800, although
some surveys (notably from financial institutions, such as Natwest) put the number as
high as £12,180.
Income Threshold Below Which No Loans Are Repayable: For the old mortgage style
loans borrowers can apply for deferment of repayment if their income is less than 85
percent of national average earnings (i.e. less than £1,780 per month in 2003.) On
income-contingent loans, the repayment threshold is currently £15,000 per year.
Loan Repayment Rate Above the Threshold: Under the income contingent scheme it is
9 percent of all income above the threshold, thus if earnings increase, total proportion of
repayment in terms of total income increases.
Loan Amortization Period: ICR loans have no fixed repayment period. Repayment
continues until death or age 65.
Most Recent Interest Rate on Student Loans: 3.1 percent (2004).
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Educational Policy Institute
United States (ICR stream)
Description: When consolidating their loans, students may choose to consolidate either
with a bank/loan guarantee agency or with the government directly through its “Direct
Loans” program. Students choosing to consolidate their loans via “Direct Lending” may
choose one of four repayment plans, one of which is known as “Income-Contingent
Repayment”.
History: The development of the income-contingent loan option and the development of
the direct loan system are inter-related. Direct lending, introduced early in the Clinton
Administration, was meant to reduce the government cost of lending by eliminating
intermediaries (primarily loan guarantee agencies) and administering repayment
directly. It also allowed the government to become more experimental with loan
repayment schemes. Previously, loans had simply been re-paid on a ten-year mortgagestyle basis; under direct lending, three new repayment schedules were introduced: the
“extended plan” (a mortgage-style basis but amortization periods stretching from 12 to
30 years), a “graduated plan” where loan repayments increased gradually over a 12-30
year repayment period, and an “income-contingent plan, described below.
Subsidies During the Study Period: Students pay zero nominal interest
Loan Remission/Forgiveness at Graduation: None
Subsidies During the Repayment Period: No subsidies are available directly on the
loans; market interest rates are charged. However, interest paid on student loans is
deductible from income tax up to a maximum of $US 2,500 per year. Also, during
periods of low-income, subsidized loans may be deferred, during which time zero
nominal interest accrues on the loan (unsubsidized loans may also be deferred, but the
interest remains the responsibility of the student). Finally, debt forgiveness applies after
25 years.
Targeting of Subsidies: None on the tax deductions: in practice, those with more debt
and who are wealthier at the time of repayment will receive greater subsidies. For
deferment, the targeting is towards low-income borrowers in repayment. Forgiveness in
the US ICR plan targets people who are low-income for very long periods of time.
Average Per Student Value of Subsidies: unknown
Loan Collection Procedure: Monthly payments made to government agency.
Maximum Debt Permitted to Carry: As an undergraduate student in a non-professional
stream, $ US 48,000.
Average Debt at Graduation: $US 19,300
Income Threshold Below Which No Loans Are Repayable: For a single BIR, $US 8,050
– except in Alaska and Hawaii where it is slightly higher.
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Educational Policy Institute
Loan Repayment Rate Above the Threshold:
The lesser of:
Method 1:
Method 2:
Take the amount of debt outstanding and
assume calculate monthly payments based on
an amortization period of 12 years. Now
multiply this monthly amount by an “income
factor”, where
Calculate discretionary income by subtracting a
“poverty level” (effectively $US 8050 for single
BIRs, but can be adjusted for family size) net
income”.
$10,000 = .55
Multiply discretionary income by 20 percent
and divide by twelve to arrive at a monthly
payment.
$37,500 = 1.00
$110,000 = 1.50
At anything other than extremely low incomes or extremely high debt, method A will
usually be the smaller number.
Loan Amortization Period: 25 years
Most Recent Interest Rate on Student Loans: Interest is charged based on the
government cost of borrowing (yield on a 91-day Treasury Bill) plus 2.3 percent . As of
March 2005, Treasury Bills are at 1.44 percent , meaning an interest rate of 3.37 percent .
www.educationalpolicy.org
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Educational Policy Institute
United States (non-ICR streams)
Description: When consolidating their loans, students may choose to consolidate either
with a bank/loan guarantee agency or with the government directly through its “Direct
Loans” program. Students choosing to consolidate their loans via “Direct Lending” may
choose one of four repayment plans, one of which is known as “Income-Contingent
Repayment” and is described in the previous section. The others are the “extended plan”
(a mortgage-style basis but amortization periods stretching from 12 to 30 years), the
“graduated plan” where loan repayments increased gradually over a 12-30 year
repayment period, and the “standard” plan, which is a traditional 10-year, mortgagestyle amortization loan. Students who choose not to consolidate via direct loans may
only choose the standard program.
History: The development of the income-contingent loan option and the development of
the direct loan system are inter-related. Direct lending, introduced early in the Clinton
Administration, was meant to reduce the government cost of lending by eliminating
intermediaries (primarily loan guarantee agencies) and administering repayment
directly. It also allowed the government to become more experimental with loan
repayment schemes.
Subsidies During the Study Period: Students pay zero nominal interest
Loan Remission/Forgiveness at Graduation: There are various types of loan remission
schemes, nearly all of which forgive portions of debt in return for commitments to
perform certain jobs for certain periods of time. The vast majority of these programs are
state programs, and hence geographical limitations also apply to the borrower (i.e. one
may receive loan remission for becoming a math teacher in-state, but being a math
teacher in another state usually results in a loss of eligibility for remission). Most of these
programs are very small.
Subsidies During the Repayment Period: No subsidies are available directly on the
loans; market interest rates are charged. However, interest paid on student loans is
deductible from income tax up to a maximum of $US 2,500 per year. Also, during
periods of low-income, subsidized loans may be deferred, during which time zero
nominal interest accrues on the loan. (unsubsidized loans may also be deferred, but the
interest remains the responsibility of the student).
Targeting of Subsidies: None on the tax deductions: in practice, those with more debt
and who are wealthier at the time of repayment will receive greater subsidies. For
deferment, the targeting is towards low-income borrowers in repayment.
Average Per Student Value of Subsidies: unknown
Loan Collection Procedure: Monthly payments made to government agency.
Maximum Debt Permitted to Carry: As an undergraduate student in a non-professional
stream, $US 48,000
Average Debt at Graduation: $US 19,300
Income Threshold Below Which No Loans Are Repayable: For a single BIR, deferment
(equivalent to Canadian Interest Relief, where government pays the interest accruing on
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Educational Policy Institute
the student loan) may be granted if income is below $US 8,050 – except in Alaska and
Hawaii where the threshold is slightly higher. Thresholds are higher if the borrower has
dependents. Forbearance – that is, a suspension of payments during which time interest
may capitalize – may be obtained at slightly higher levels of income.
Loan Repayment Rate Above the Threshold: Under the “standard” or “extended”
repayment schemes, a mortgage-style amortization applies. Under the “graduated”
scheme, an amortization period is agreed at the start of the loan, and payments are made
so that repayments increase gradually each year of the loan (in some ways, this is similar
to the Swedish system of loans). As a result, rates will vary according to the size of the
debt and the length of the amortization period chosen.
Loan Amortization Period: Amortization period under the “standard” repayment
stream is 10 years. For direct lending borrowers, or those who have consolidated their
loans under the direct lending program, two other options are available: “Extended”
and “graduated” repayment, where the amortization period may last anywhere from 12
to 30 years.
Most Recent Interest Rate on Student Loans: Interest is charged based on the
government cost of borrowing (yield on a 91-day Treasury Bill) plus 2.3 percent. For
2005, the interest rate is 3.37 percent.
www.educationalpolicy.org
40
epi
Recent Publications from the
Educational Policy Institute
Global Higher Education
Rankings 2005
The Global Higher Education
Rankings 2005 represents the
first systematic and rigorous
exploration of the
affordability and accessibility of higher education
within an international
comparative context. The
rankings gather available,
comparable data on
student costs, resources,
and opportunities in
terms of higher education.
Latino Youth & the Educational Pipeline
This report series documents
the progress of Latino students
from eighth grade to the
workforce. EPI analyzed data
from the National Educational
Longitudinal Study (NELS),
which first surveyed eighthgrade students in 1988 with
followup surveys in 1990,
1992, 1994, and a final
followup survey in 2000.
Value Added: The Costs
and Benefits of College
Preparatory Programs
This report considers issues
related to the complex
proposition that the cost of
early intervention program
delivery is directly and
positively tied to the ability
of programs to successfully enable students to
get into college.
The Affordability of University Education
This report looks at the relative
affordability of public university education in the United
States and Canada, comparing
all 50 US states and 10
Canadian provinces on
postsecondary access,
student financial aid, tuition
and fee charges, and overall
net cost of attendance for
the years 1999-01.
Changes in Tuition Policies:
Natural Policy Experiments
in Five Countries
This international study
reviews tuition and fee policy
changes and strategies in 5
countries and 9 jurisdictions.
Funded by the Canada
Millennium Scholarship
Foundation, this review
provides insight into the
impact of tuition policies
on enrolment.
EPICenter/EPICentre
EPIcenter is a quarterly
report by EPI which provides
information on recent
research conducted by EPI.
A US/international version
is distributed out of the DC
office, while a Canadian
EPICentre is distributed
out of the Toronto office.
www.educationalpolicy.org
“Improving Educational Policy & Practice Through Research”
www.educationalpolicy.org
Copyright 2005